Shares in the Pendragon car dealership business jumped 10 per cent this morning following news that it had a strong six months and that a third suitor had joined the battle to buy it.
The Nottingham-based group’s share price hit 33p – more than double its price in the summer – after it revealed underlying pre-tax profits for the first half of 2023 of £36.7 million – up from £33.5 million.
Like-for-like revenues for the group – which includes Stratstone, Evans Halshaw and Carstore – were up more than 15 per cent at £2.09 billion.
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Pendragon has 134 franchises and 12 used cars dealerships as well as a dealer management software arm called Pinewood.
The results were issued just hours after it revealed a bid from US car retail giant AutoNation, offering 32p a share for the business, valuing it at almost £450 million.
Only last week Pendragon had said it wanted to sell Evans Halshaw, Stratstone and CarStore to America’s biggest motor retailer, Lithia Motors, for £250 million. As part of that deal it would keep hold of Pinewood, while rolling it out to Lithia’s 50 海角视频 sites and North American operations.
Within days Pendragon’s biggest shareholder Hedin, which owns a 28 per cent stake, launched a joint unsolicited bid with Penske, which owns Britain’s bigger motor dealer, Sytner.
Pendragon rejected an initial 28p a share approach from the pair but then received a further bid worth 32p a share and said it would consider the sweetened offer.
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The offer from AutoNation has matched the latest offer from Hedin and Penske and is also in cash.
On Wednesday, Pendragon said it was looking at all three proposals “in consultation with shareholders”.
Pendragon chief executive Bill Berman said: "I’m pleased to report a strong trading performance in the first half, with revenue and profits up across all our divisions despite a challenging backdrop.
“We delivered strong volume growth for both new and used vehicles during the period, while a robust operational performance supported healthy margins in our 海角视频 Motor division.
“Pinewood continues to make very encouraging progress, with investments into product innovation and the delivery of new functionality helping to drive user growth and higher average revenue per user. I'd like to thank all our associates for their hard work delivering another strong set of results.
"Earlier this month, the board of Pendragon formally concluded its strategic review of the business, which was focused on delivering full value for our shareholders.
“The group announced a recommended transaction with Lithia Motors that would deliver the sale of our automotive retailing and leasing operations, the launch of Pinewood Technologies as a standalone, listed company and a strategic partnership with Lithia to accelerate Pinewood's growth in North America.
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“The board has subsequently received unsolicited approaches from Hedin Mobility Group and PAG International and from AutoNation, which it is considering in consultation with shareholders. We will provide a further update at the appropriate time."
AutoNation is the biggest car dealer in America, with a Nasdaq stock market valuation of around 25.8 billion US dollars (£20.8 billion).
It was founded by entrepreneur Wayne Huizenga in Florida in 1996 and has grown to span about 300 dealerships across America.
The bidding battle marks the culmination of a lengthy period of takeover interest for Pendragon.
It was approached by Swedish motor company Hedin Group last September with a possible takeover offer worth £400 million, or 29p per share. The group, owned by Anders Hedin, was handed an extension to firm up a bid but it did not result in a sale.
It came after Pendragon was forced to reject a bid of more than £400 million from an unnamed international company in August last year after being unable to get hold of one of its biggest shareholders.
It said at the time that it had managed to get the support of four of the five shareholders but could not get through to the fifth.
Russ Mould, investment director at online stockbroker, AJ Bell said: “Strong first half results from Pendragon, against a difficult market backdrop, help explain why there’s a bid battle afoot for the car retailer.
“The three-way race to buy the business could leave shareholders as the major winners.”